New Member here getting into Self Storage

Kasing Ng

Accountant · San Francisco, CA · Member since 2026 · 114 posts · 66 votes

2w

Hi Jake, welcome, and smart to be underwriting markets before you start calling owners.

Whichever path you pick, the underwriting lines I would pressure-test hardest:

Economic vs physical occupancy. Storage leans on "$1 first month" promos, so a facility at 90%+ physical can run a lot lower economic. Underwrite in-place economic rent, not the sign out front.

Supply. This one is hard to say. Net rentable SF per capita in the 3-mile trade area is the number that makes or breaks rate growth (people benchmark it loosely around 7, and above that tends to be oversupplied). Check what's permitted or under construction nearby too, since storage overbuilds fast locally.

The value-add vs dev split itself. Value-add usually runs on ECRI (existing customer rate increases), occupancy, and ancillary income like tenant insurance, so pull apart how much of the seller's pro-forma is real versus already captured. Ground-up, you're underwriting a 3 to 4 year lease-up with concessions along the way, so you want a solid spread of yield on cost over the market cap rate to pay for that risk and timeline.

On the tax side, two things first-timers often get backwards:

Timing. On an acquisition you can run cost segregation right away and front-load a big depreciation deduction. Ground-up is the opposite. Costs capitalize during construction and depreciation doesn't start until the property is placed in service, so the benefit lands later.

The bigger one: with a full-time W-2, those depreciation losses are very likely passive under Section 469 and can't offset your salary. Storage is generally treated as a rental activity, so it's passive unless you're a real estate professional, and you can't be one with a full-time job. The losses aren't lost, they suspend and release when you sell, but they probably won't shelter your income the way people assume going in.

None of that is a reason not to do the deal. Just underwrite the economic occupancy and supply numbers hard, and model the after-tax picture both ways.

(CPA and former CRE fund auditor. I am not an investor. General info, not advice on your specific situation.)

[email protected]248-408-3855

Brad SeidBusiness Member

Lender · Licensed in 28 States · Member since 2026 · 187 posts · 58 votes

2w

@Jake Berger Hey Jake, exciting to hear about your plans! Before jumping into development or an acquisition, it may be worth exploring your financing options to see what makes the most sense for your first deal. Feel free to reach out if you need help exploring lending options. Happy to connect!

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Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

OP do ground up.

Ashish AcharyaBusiness Member

CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes

[email protected]941-914-7779

Jake, given your institutional real estate background, you’re already approaching this from a much stronger starting point than most first-time investors.

For a first personal deal, I’d probably lean toward an existing under-managed facility if you can find one with a clear value-add opportunity. You get actual occupancy, rental, and expense history to underwrite while still having room to improve operations, pricing, marketing, or unit mix. Ground-up can work, but it adds entitlement, construction, lease-up, and financing risk all at once.

Before you start calling owners, I’d get very specific about your acquisition criteria, target size, price range, occupancy, competition, expansion potential, and the operational problems you can realistically solve. Once you have a property under consideration, the tax side gets interesting too. Self-storage can have meaningful depreciation and cost-segregation opportunities, but I'd treat those as an after-tax enhancement to a deal that already works, rather than the reason to buy it.

The other thing I'd keep in mind with a full-time job is the operating model. Your time has value too, so I'd underwrite what it costs to have local management and vendors in place from the beginning.
You’re asking the right questions early, which should make the eventual underwriting much stronger.
Happy to connect!

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Matthew MorrowBusiness Member

Investor · PA - NY - NJ · Member since 2019 · 714 posts · 250 votes

[email protected]484-791-6200

@Jake Berger Welcome! Before falling for a facility, look hard at how much supply is within a few miles and what's already planned or approved nearby. A new build down the road can change your occupancy fast. Also ask whether the current numbers come from real move-ins or from heavy discounts. Are you looking at existing facilities or ground-up?

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Jake Berger
OP
Investor · Member since 2024 · 2 posts · 3 votes
2d
Thanks Matthew. Helpful thoughts. I’m looking at both existing and ground-up - not sure which route to go yet.
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Diana KhanPro Member

Attorney · 10451 Mill Run Cir #755 Owings Mills, MD 21117 · Member since 2024 · 625 posts · 213 votes

[email protected]240-266-0291

Quote from @Jake Berger:

Hi everyone, my name is Jake, I just joined Bigger Pockets as I’m beginning my journey investing in self storage.

I currently work full time in NYC at a large institutional real estate investment manager ($33B AUM, primarily multifamily and industrial funds).

I’m 27 years old and want to start investing in some smaller deals of my own for additional income.

A buddy of mine from college who lives in Chicago bought a piece of land in rural IL, developed storage units, and now is close to saving them fully occupied. I kept up with him through every step of his process and am confident this is something I can and want to do myself.

Right now I’m underwriting markets within a 4-hour drive of NYC (most recently the Albany / up to Saratoga Springs area) and weighing whether to develop or to buy an existing, under-managed facility. Next step is to use a skip tracer in my chosen market and start calling property owners.

I joined BP to connect with people who have done this successfully. I’d love to hear from anyone who owns self storage in upstate NY or New England in general.

For those who are doing it, would you recommend a first-timer start with ground-up development or a value-add acquisition? I’m also open to any other tips or advice on how to proceed at the stage I’m currently at - I joined this forum to help keep my momentum going.

Thanks, look forward to hearing from anyone!

@Jake Berger, I can see why both options are appealing, especially with your background in institutional real estate. For a first personal investment, I'd probably lean toward exploring an existing facility with some room for improvement, assuming the property and numbers make sense. You're taking over something that's already operating rather than starting the entire development process from scratch.

I'm a real estate attorney, broker, and investor in Maryland, and I've worked with investors where the legal details became just as important as the numbers. With an existing property, I'd want to understand the title, current rental agreements, and any obligations that come with the purchase. With development, you're dealing with a different set of issues involving land use, approvals, construction contracts, and responsibilities if plans change. Both have their challenges, just in different ways.

I enjoyed reading about what you're working toward, @Jake Berger. It's interesting to see someone with institutional experience moving into smaller investments of their own. Real estate acquisitions and contracts are a big part of my work, so I'd be happy to stay connected and exchange perspectives as you get further into self storage.

Ashley RigsbeePro Member

Customer Success & Onboarding Specialist at BiggerPockets · Charlotte, NC · Member since 2023 · 115 posts · 45 votes

Welcome to the BP community Jake! Your skip tracing plan to reach owners directly is a smart move. Looking forward to seeing more of your insights within the forums.